Empowering women and helping them to take control of their spending, has become a passion for Vrinda Gupta, the San Francisco-based CEO and founder of Sequin.
Inspired by personal experience, as well as an impressive career in financial services with Visa, Gupta, a first-generation immigrant to the US from India, is taking a stand and disrupting the US finserve system, which she says is heavily weighted towards the male, rather than female users.
The initiative, which launched late last year, will be releasing a number of new incentive plans and services in 2022.
“Growing up, I saw my mom, despite being so savvy and so smart, always fear the financial system, and credit specifically. She felt like there were a lot of gotchas. You could get into debt, there's a fine print you can trip up on, etc,” Gupta explains.
As a result of her mother’s suspicions, she decided to seek her first job in the financial services market. It wasn’t a rebellious move - rather, she wanted to feel empowered through knowledge of the systems. She worked at Visa for almost five years, building and launching credit cards. In fact, Gupta’s team launched one of the most popular cards to be used in the US.
But crunch time came when she had an epiphany about women and financial services - because she applied for the card she had helped create and was turned down.
"I worked at Visa for almost five years, launching popular cards. There's a really popular one in the States called the Chase Sapphire Reserve. And I, along with my team, built that card. And I applied and got rejected," she states.
It was a defining moment for her - and resulted in a complete seachange of purpose. “First off, I felt as disempowered as my mom always had done. I thought, ‘I'm in the belly of this beast and I still can't really understand the system.’”
After that, Gupta threw herself into researching Visa’s data and discovered that that 70% of women were spending on debit cards, rather than credit cards. Very often, if they used credit cards, those cards would be in other people’s names. Therefore, they weren’t able to build up their own credit ratings.
The problem perplexed Gupta, who could see that despite being in the workforce, and despite having great incomes, women are not building credit effectively and are lacking credit history. The situation, she says, has led to a massive credit access imbalance between the sexes. “When we go to acquire credit, we are getting pre-approved less often. We are getting lower credit limits. We're getting higher interest rates. We're also getting rejected more often,” she states.
A masculine financial system
The crux of the matter comes down to a financial system geared towards the needs of men rather than women, says Gupta, who points out that women are marginalised when it comes to credit because financial services are historically sexist.
“It's a very challenging topic to delve into and a lot of the very early founders of what is now Sequin carried out some deep research into exactly what the challenges are. I think if I were to boil it down to one thing, I would say the financial system truly was never designed with women in mind. Data shows that women could be denied a credit card without a male co-signer until 1974, which is really not ancient history. That's not too far from my lifetime, and very much in my mother's lifetime. The same thing happened with business loans until 1988.”
And it isn’t all ancient history either, as Gupta says this generation is still feeling the reverberations of that culture. “This is a system that centres around men has been designed with men in mind. We're seeing banks advertising 13 times more to men than they are to women.”
Poor reward targeting
Another issue Gupta pinpoints surrounds the reward incentives that are used to attract customers to the credit system. She notes that many of them simply don’t appeal to women because they are built around the “prototypical traveling male” with a raft of travel benefits that simply don’t apply to women in many cases. This failure to recognise the spending power of female customers is she says, something that will be detrimental to credit card companies in just a few short years.
She explains, “You see so many of these travel benefits on these cards. However, there's this shift in the way that consumers are spending. And by the end of this decade, women are going to be controlling 75% of discretionary spend, and spending in pretty different categories. The credit cards of today are really rewarding travel, dining, et cetera. But where women are spending is retail, beauty, charities, and household goods - where we control the vast majority of the household spending as well.”
The glaring market gap surprised Gupta, but also drove her to embrace the opportunity to create change. Armed with a wealth of data insights, she set about brainstorming a new product that could nurture women by building their credit scores, offering them a whole suite of products that appeal to their needs and make them part of a system that makes credit feel safe and productive - not alien and at the mercy of services that don’t cater to their needs.
A new solution to an age-old problem
As well as building up their credit rating and also being incentivized through spend avenues that women are interested in, Sequin has a unique superpower, because it's not a credit card. It’s actually a debit card that builds credit.
In line with the KYC data gleaned from extensive research, Gupta decided to gear the product towards the spending vehicle most women use. She explains, “The piece that is really unique to our product is that it's a debit card that builds credit, which debit cards traditionally just don’t do. But, Sequin is innovated so that we actually report your payments to credit bureaus through a third-party partner. And that shows up on all three credit bureaus.”
This ingenious workaround seems a patently obvious solution now Gupta and her team have brought it to the fore. However, they have also taken further steps to improve the product. “We go a level deeper as well in the way that we're actually reporting, she says, and lists three key factors.
- Repayment histories: Sequin collects and presents data that shows users are paying their bills on time.
- No credit utilisation reports: Approximately 30 or 35% of a credit score is credit utilisation of a limit, namely, what percentage of the limit is being used at any given time. A credit utilisation score that is too high, impacts negatively on available credit.
- Improved financial education and better financial inclusion for women: Data shows that young women are half as likely to have had a lesson in credit by the time they reach high school compared to men. Sequin runs credit power hours, which are expert-led sessions to help women understand how exactly the system works and how to automatically build their credit.
- Female-focused reward incentives: Sequin offers a range of incentives directly related to the KYC data of users so that customers can enjoy a range of perks that actually resonate with them.
But it's not just about savvy spending. Women generally are approved for lower credit lines than men, points out Gupta. “We're getting lower credit lines. And so, even if we're using the same amount objectively as a man, then our credit utilisation looks higher, it looks inflated. And so it makes our risk look worse than it actually is, even though statistically, we're more likely to repay on time. And so we just don't report credit utilisation in our product.”
Sequin is seeking to redress this considerable imbalance by bypassing the credit utilisation factor altogether. She says that by reducing that credit utilisation or removing it altogether, women can increase their credit scores by 25 or 30 points in a week. “We don't report credit utilisation on our product. So that's one piece in the details of how the system works and how it reflects some of these systemic biases.”
In terms of rewards, a lot of research has gone into making sure the card fulfills its promise of demographic appeal, and several new incentives will be launched in 2022. Gupta explains, “We are running cashback in pink tax categories, which is a new feature. We’re really re-imagining what does a reward means for a woman's life and what's going to make the most impact.”
But it goes further than just offering more appropriate rewards. Gupta has taken the idea further still, and Sequin will be launching a number of partnerships in 2022 with early-stage women-founded companies that are reinventing the D2C space.
She says, “We have partnerships with amazing founders, including the mental health space, personal branding services, plant delivery, and plant care. So there's a lot of just a different take and a fresh take on what exactly a credit/debit card can do for you and offer you.”
Improving diversity in fintech
So in terms of the fintech being a typically masculine space, how has Gupta found the reception of her product within that?
Her response is remarkably positive as she describes the reactions she’s had in terms of introducing Sequin and its concept to the marketplace.
“It's been interesting. I think it falls into two camps. Either there's someone with an experience like you, say a recent immigrant, understanding how challenging it is to get credit. Or men get it especially. They're like, ’Yeah my wife got a 20th of my credit line for the same product.’ The folks who don't get it, I've taken this as a moment to educate,” she says.
Ultimately, Gupta believes that sharing data about what is actually happening in terms of women’s credit lines is the best way to convince others of the reality and need for disruption. “We need to share a lot of that data behind what's happening. According to Visa data, 70% of women are spending on non-credit-building tools. And so, of course, that's going to lead into these downstream impacts of more likely to experience a negative credit experience.”
And making financial planning, credit, and education more inclusive and accessible is also a rewarding process. While Sequin does not yet have planned launches outside the US (there is too much to do on home soil first) Gupta does have a global vision for the product. After all, it's not a gimmicky project. Rather, it is the solution to a problem that 50% of the world’s population is currently navigating.
“We started off with a problem that women are having, in that credit doesn't feel approachable. We took all of that. And we said, ‘what is the best product that we can build to actually address the problem?’ And so I think this has been really eye-opening for a lot of people. And I think that's one of my favourite pieces about this. It's unearthing a new type of inequity that's affecting women that isn't very talked about.”
Bringing investors on board was also an interesting process, which saw Gupta deliberately seek out female investors.
“Ultimately the point and mission of our product is to help women have more wealth in their pockets. And so, that also extends to who's in our cap table. And so, really focused on women investors. In our pre-seed round, 92% of our cap table was women, which is a completely flipped cap table. And as we went into our seed round, I think almost all of them reinvested into our seed. And so the representation of our cap table is actually incredible, and is something that was really important to me.”
Launching Sequin in a pandemic
Gupta very much hopes that the struggles caused by the past two years of lockdowns and are now behind her. However, even though launching her product in such a time of unease and crisis has been challenging, she believes the experience has only made her, and the brand, stronger.
“I think that's when you prove to yourself how much you care about what you're doing. And I think it's those moments that are like, okay, I am holding on really deep to my why, which is true, I just want women to feel empowered in the financial system. I think if I cared about that any less, I would've been out at that time.”
But it’s been a bumpy ride, regardless of her unwaveringly positive attitude, which she says actually helped reshape and develop the product into something far better than the original concept.
“When we first launched Sequin, the idea was a premium credit card with more women-focused rewards. Then the pandemic hit, and two things happened. One was, the main partner we were going to launch our credit card with also felt the effects of the pandemic and said, we can't support you anymore.
“After that blow, I was reading articles about how women were being disproportionately impacted during the pandemic in terms of finances, and women entrepreneurs not getting access to PPP loans at the same rates as men were. And of course, it all came down to credit. And so the confluence of not having a true credit card partner plus listening to the community that we had built around wanting more of an understanding of credit and finances, was that we went back to the drawing board and devised the new debit card system, which actually works a lot better. So, it ended up working out in the end.”
Gupta describes losing their initial partner as a “brutal” experience. But believes it had all worked out for the best and is looking towards a future that helps empower women financially in the US and eventually, further afield.
She concludes; “We love the partner ecosystem that we work with. We love the product that we've built. I think we stayed true to where we started, which was just centering women, and we built something that I think addresses the problem a lot more fundamentally.”
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